As I read the Second Circuit decision, I was pleased—for reasons I can’t quite, and won’t bother trying to, articulate—that the appellate court was affirming the denial of a preliminary injunction in part, at least, because the granting of the injunction would probably have “severely harm[ed] Aereo, likely ending its business.”

Yet I was at the same time bothered by something I couldn’t quite put my finger on, until I did, and it was nothing other than the acknowledgment by the Second Circuit (immediately preceding the one just quoted) that “the [district] court concluded that the Plaintiffs had demonstrated a likelihood that they would suffer irreparable harm in the absence of a preliminary injunction.” Which means, of course, that right now—and since March 14, 2012, when Aereo began providing its service to subscribers… and through tomorrow, and the day after, and the day after that… until such time as the plaintiffs prevail in the two lawsuits pending in the Southern District of New York (and are awarded a permanent injunction), an eventuality Judge Nathan has deemed unlikely as a matter of law, which ruling the Second Circuit has affirmed… the plaintiffs, every broadcast network in New York City, are being irreparably harmed.

How, exactly? The appellate decision doesn’t discuss the harms to the plaintiffs, because it doesn’t need to. The Second Circuit agreed that the plaintiffs “are not likely to prevail on the merits,” so its discussion of the harms claimed by each side of the dispute are minimal. “Plaintiffs do argue that any harm suffered by Aereo should be disregarded in the balance of hardships analysis because Aereo’s business is illegal,” the Second Circuit decision reads, “…[b]ut this argument hinges on the conclusion that Aereo’s business infringes the Plaintiff’s copyrights,” which the court concluded it does not, at least “on the limited question before us… whether Aereo’s transmission of unique copies of recorded programs to the Aereo users who directed that they be created are public performances.” So we must seek our answer elsewhere. Perhaps in the district court opinion.

But before we look there, let’s think about this like regular folks. Regular folks don’t read court opinions. Regular folks ask whether something feels right or wrong. And this feels at once both right and wrong.

Imagine that you live in New York City. As a NYC resident, when you’re not at a Yankees game or ice skating at Rockefeller Center or having lunch with, say, Michael Bloomberg at Ray’s Famous Original Ray’s Pizza, you might watch some broadcast television, which you don’t pay for, since you have an antenna attached to your top-of-the-line widescreen HD set in your 350-square-foot studio apartment that you share with a roommate and a cat. But when you get home from your pizza date your roommate and his girlfriend and her friend are using the TV to play video games (only ironically, though)… but you’re not out of luck, since you’re an Aereo subscriber! So you take your iPad to your freecycled futon in your corner of the room and you log in and request that the new episode of whatever show everybody likes that’s playing right now be streamed to your Internet-capable device.

Where’s the harm in that? You’re merely getting delivered to your tablet the free content that you would have watched on your television. Yes, you’re paying a third party for the convenience, but that convenience is not offered by the network anyway, so you’re not depriving it—or anyone—of revenue. You’re paying money you wouldn’t pay if you just watched network television on a television, but that doesn’t mean that you should be paying that money to the network.

But there is other, different harm to be suffered by the plaintiffs, potentially anyway, and the district court indeed acknowledged it, albeit only starting on page 38 of the 52-page decision. “Plaintiffs have indicated that they are likely to seek interlocutory appeal to the Second Circuit,” Judge Nathan wrote (and they sure did). “Accordingly, the Court will set forth its analysis of the remaining factors [considered on a motion for preliminary injunction] to ensure that the record is fully developed.”

The second… factor is whether Plaintiffs will suffer irreparable harm in the absence of an injunction…. The Court may not presume irreparable harm, but rather must consider the injury Plaintiffs will suffer if they lose on the preliminary injunction [motion] but ultimately prevail on the merits.” The Plaintiffs, Judge Nathan found, “have identified a number of categories of irreparable harm”:

First, Aereo will damage Plaintiff’s ability to negotiate with advertisers by siphoning viewers from traditional distribution channels, in which viewership is measured by Nielsen ratings, into Aereo’s service which is not measured by Nielsen, artificially lowering these ratings.” Huh. That… that actually makes sense. “The record establishes the importance of Nielsen ratings to Plaintiffs’ ability to negotiate with advertisers to monetize their programming, as well as the importance of such advertising revenue.” Indeed, in the simplest terms: You don’t pay for broadcast television because advertisers pay to sell you things on broadcast television, which you get for free. So if it appears that you’re not watching broadcast television — even if you are — then advertisers aren’t going to pay to advertise during shows you aren’t watching, even if you are. (Of course, none of this takes into consideration that anyone watching television the old-fashioned way can always get up from the couch during commercials, but that’s never/always been taken into account.)

Second — and, really, this probably should have been first — the evidence shows that by poaching viewers from cable or other companies that license Plaintiff’s content, Aereo’s activities will damage Plaintiffs’ ability to negotiate retransmission agreements, as these companies will demand concessions from Plaintiffs to make up for this decrease in viewership” Indeed, Aereo’s CEO explained to the court that “part of the idea behind Aereo was to allow consumers to bypass cable companies to watch broadcast television/”

ABC, CBS, NBC… & MDB!

That’s a terrific idea, in this writer’s opinion. At my home (outside NYC, but just), we have a basic cable setup, but only because we were getting lousy antenna reception. So the opportunity to ditch our cable service but still get broadcast programming—and in fact get it on our two MacBooks, two iPads, and two iPhones (most of which we can connect to our widescreen HD television set) is very attractive, and something we might look into before Congress shuts this whole thing down or Fox pulls its own plug.

Harking back to my suggestion that the Plaintiffs must be suffering irreparable harm right now, as I write this, as you read it… well, that’s not entirely true. “The Court does not… believe” Judge Nathan wrote, “that Plaintiffs will suffer the full magnitude of their claimed irreparable harm during the pendency of this litigation.” But that’s okay. Because, after all, the plaintiffs are unlikely to prevail on the merits of their claims anyway.

3 comments

Hmm….why is it Aereo’s problem that Nielsen doesn’t count Aereo viewers? Sounds like Nielsen’s problem to me. And if the other harm comes from the fact that Aereo gives good reception to people outside good reception areas, freeing them from having to buy cable that they don’t want, isn’t that granting Aereo’s central argument that it’s just a better antennae?

Tim, you have a point, of course, about Nielsen. That problem might possibly be solved by having “Nielsen-Aereo families,” as it were. As for the other (I think much larger) issue, the cable companies pay the broadcast companies to be able to provide the network programming via cable. Aereo’s setup lets it provide those network feeds to customers without paying the networks for it. So the cable companies will now ask, “Why are we paying you for the feed?” And it will be a valid question as long as Aereo’s system is legal. Cablevision, for instance, will be able to set up its own Aereo-style setup to get Fox programming, for example, via antennaâ€”for freeâ€”which it can then package with HBO, et al. Alternatively, if Cablevision is willing to continue to pay for the network feeds (directly provided by the networks), it’s going to ask for reduced licensing rates, since it’s going to be losing customer (the ones who had subscribed to cable primarily to get decent reception of network broadcasts).

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The question of whether consumers are likely to be confused is the signal inquiry that determines if a trademark infringement claim is valid. I write here about trademark law, copyright law, brands, free speech (mostly as it relates to the Internet) and legal issues related to blogging. That may sound like a lot, but it's just a blog.

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